Hollins University is the only private college in Virginia and one of just 27 private institutions nationwide to receive an A+ in Forbes magazine’s report of College Financial Grades for 2024, as reported in University Business magazine.
Forbes stated that the publication compiled its college financial grades list using “the latest financial data from the U.S. Department of Education’s National Center for Education Statistics, which covers the fiscal year that began in July 2021 and ended in June 2022.” Forbes employed nine components to measure operational vigor and balance sheet fitness for almost 900 private colleges with 500 or more full-time students. These markers included:
- Endowment Assets per Full-time Equivalent Student (FTE), “perhaps the most important determinant in a college’s long term financial health,” according to Forbes.
- Primary Reserve Ratio, which “broadly measures a college’s liquidity, grading how well its expendable assets could meet its annual expenses without straining its normal operations.”
- Viability Ratio, which “analyzes a college’s expendable assets divided by its total liabilities, similar to the primary reserve ratio’s measurement relative to annual expenses.”
- Core Operating Margin, which “measures whether tuition, donations, and investment revenues cover a college’s educational expenses by subtracting its core expenses from its core revenues and dividing the difference by its core revenues.”
- Tuition as a Percentage of Core Revenues (“Diversified revenue streams make any organization more financially secure, and colleges are no different.”)
- Return on Assets, which “divides a college’s change in net assets during the year by its assets at the beginning of the year.”
- Admissions Yield, which “measures the percentage of accepted students who choose to attend, and a higher number is a sign of a healthy enrollment.”
- Percentage of Freshmen Getting Grant Aid
- Instruction Expenses Per FTE, which “measures how much schools actually spend on educating each student.”
In explaining the significance of fiscal health in choosing a college or university, Emma Whitford, who covers higher education for Forbes, writes, “Balance sheet strength is never mentioned on the list of must-haves. But it should be. For any student who wants to spend their college days on the same campus – especially if that school is small to begin with – selecting a financially sound school is more important than ever.”
